Windfall tax for major companies to be introduced in Russia

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Monitoring of the Federal Legislation dated 8.09.2006

Direction of the Central Bank of Russia No. 1713-U of August 8, 2006 on the Amendments to the Instruction of the Bank of Russia No. 117-I of June 15, 2004 on the Procedure of Submission by Residents and Non-Residents to the Authorised Banks of Documents and Information in the Course of the Currency Operations, Procedure of Recording of Currency Operations by the Authorised Banks and Drawing up of Transaction IDs

Amends the content of information recorded by the bank in the database of currency operations, including the one on operations of natural person independent entrepreneurs, as well as specifies the procedure of submission of documents and information by the resident in cases of introduction of amendments to the contract (credit contract) pertaining to information indicated in the transaction ID.

According to the amendments, the database of currency operations shall include in addition: information on the sent payment (transfer, writing off), name of the bank of the recipient of the payment as indicated in the payment document when writing off monetary resources or the payer bank when transferring money on the account, bank identification code indicated if the bank of the recipient of the payment or the payer bank is the authorised bank, bank SWIFT code for the non-resident bank being participant of the SWIFT system, NR code for other non-resident banks, code of the currency of the price of the contract - in cases envisaged in the Instruction.

For currency operations of legal entities (residents and non-residents) or natural person independent entrepreneurs (residents), the authorised bank shall record in addition in the database information on the account owner and information on the payment recipient.

The procedure of keeping (including the structure) of the mentioned database is defined by the authorised bank independently.

When amending the contract (credit contact) or another information indicated in the transaction ID, appropriate documents and information shall be presented no later than the day of the next currency operation under the contract (credit contract) or no later than the next time the documents and information are submitted to the bank pertaining to currency operations with non-residents under foreign trade transactions or because of control measures carried out by the authorised bank over currency operations.

The Direction must be published officially in the Herald of the Bank of Russia and shall enter into force from November 1, 2006.

Registered in the Ministry of Justice of the Russian Federation on September 4, 2006. Reg. No. 8209.

Letter of the Ministry of Finance of the Russian Federation No. 03-01-14/9-460 of August 22, 2006

According to the Federal Law No. 171-FZ of November 22, 1995 on the state regulation of production and circulation of ethyl alcohol, alcoholic and alcohol-containing products, the types of activities pertaining to production and circulation of ethyl alcohol, alcoholic and alcohol-containing products, except for the purchase of ethyl alcohol, alcoholic and alcohol-containing products, are subject to obligatory licensing. The mentioned Law does not apply to activities of organisations pertaining to production and circulation of medicines, treatment and prevention, diagnostic substances containing ethyl alcohol, as well as activities of apothecary institutions pertaining to the making of substances to personal prescriptions, including the homoeopathic preparations, preparations of veterinary use, perfumery and cosmetics having undergone the state registration in the authorised federal bodies of executive power.

Activities of organisations of the wholesale trade and apothecary institutions in the sphere of circulation of medicines is licensed on the basis of the Federal Law No. 86-FZ of June 22, 1998 on the medicines.

Thus, organisations possessing licenses for pharmacy activities do not need licenses for production, storage and supplies of alcohol-containing products for the purposes of production and sale of medicines, treatment-and-prevention and diagnostics substances containing ethyl alcohol.

Letter of the Federal Tax Service No. 09-1-03/3103 of June 16, 2006 <br>

The actual legislation does not have an efficient instrument to combat creation of nominal legal entities ("fly-by-night companies"). Therefore, the tax bodies send at their own initiative to other agencies, the Bank of Russia and commercial banks the lists of addresses of multiple registrations and the lists of persons with multiple registrations of enterprises to provide access to information significant for the determination of the risks of participation of organisations possessing nominal addresses and applicants in illegal schemes.

Nevertheless, the Federal Tax Service of Russia does not inspire to use the mentioned information as an absolute duty of the banks or as a single and sufficient reason to refuse to open an account to the potential client. It is expedient to use the lists of addresses of multiple registrations and the lists of multiple applicants in combination with other sources of information permitting credit organisations to combat legalisation (laundering) of incomes obtained in a criminal way and financing of terrorism.

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